American Express Posts Lower Earnings, Revenue
January 19 2017 - 7:00PM
Dow Jones News
By Anne Steele and Robin Sidel
American Express Co. posted lower results in the final quarter
of the year as it ramped up spending on growth initiatives and said
it is making progress in efforts to jump-start its business.
Shares edged down 1% to $75.86 in after-hours trading
Thursday.
American Express has suffered from issues ranging from the loss
of its 16-year exclusive relationship with warehouse-club retailer
Costco Wholesale Corp., heavy competition and declines in corporate
travel budgets.
"While we continue to operate in a very challenging environment,
we ended the year in a stronger position than we started and have
built momentum across our business," Chief Executive Kenneth
Chenault said in a news release.
Mr. Chenault said the company is ahead of plans to reset its
cost base and improve operating efficiency. AmEx last year said it
would cut $1 billion in costs. On Thursday it said its
fourth-quarter expenses were 2% lower.
The company is continuing to feel the impact of the end last
year of its longtime card partnership with Costco even as it tries
to retain Costco customers by offering them new cards.
AmEx's revenue fell 4.4% to $8.02 billion. Excluding the Costco
business and the impact of a stronger U.S. dollar, revenue rose
6%.
Card member spending grew 7% during the quarter, excluding the
impact of Costco in the year earlier-period and the effect of the
stronger dollar.
The company attributed the gains to continued strength in
international markets, accelerated growth among small and midsize
companies and strong long-term relationships with higher-spending
consumers.
"Spending by large corporations remained weak," said Chief
Financial Officer Jeffrey Campbell in a conference call with
analysts.
Best known for its charge cards that require customers to pay
their bills in full every month, AmEx is expanding its credit-card
portfolio allowing customers to carry a balance. The company also
last year ramped up marketing and promotions on its platinum charge
card.
AmEx said credit quality remained strong and is performing
better than it had expected. Still, the company is likely to set
aside more money to cover potential loan losses in the future.
For 2017, the company forecast earnings of $5.60 to $5.80 a
share, bracketing analysts' estimates for $5.75 a share, according
to Thomson Reuters.
In all for the fourth quarter, American Express reported a
profit of $825 million, or 88 cents a share, down from $899
million, or 89 cents a share, a year earlier. Excluding
restructuring charges, earnings were 91 cents a share, below
analyst estimates for 98 cents.
Write to Anne Steele at Anne.Steele@wsj.com and Robin Sidel at
robin.sidel@wsj.com
(END) Dow Jones Newswires
January 19, 2017 18:45 ET (23:45 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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